DELHI: Supply of retail space in shopping malls fell by 65 per cent during January-March period in top eight cities of India to 3.5 lakh sq ft as completion of four malls got deferred, according to global property consultant Cushman & Wakefield.
Mail Supply stood at 1 million sq ft during first quarter of 2013 in these eight cities -- Delhi-NCR, Pune, Mumbai, Bangalore, Chennai, Hyderabad, Ahmedabad and Kolkatta."Total mall supply received in Q1 2014 (January-March, 2014) was merely 22 per cent of the total expected in this quarter, also registering a year-on-year drop of 65 per cent in total mall supply in Q1 2014 over same time last year," C&W said in a statement.
"Fresh mall supply of 3,50,000 sq ft became operational, all of which was received by Pune. The rest of the cities saw no new mall development activity," it added. First quarter of 2014 witnessed deferment of 4 malls with nearly 1.26 million sq ft of retail space. Bangalore witnessed deferment of 2 malls with 5 lakh sq ft area, while Pune saw deferment of 1 mall of 4.3 lakh sq ft and Hyderabad one mall of 2 lakh sq ft.
Moreover, Kolkata faced deferment of 1.2 lakh sq ft space in a mall which got partially operational during Q4 2013. Commenting on the report, C&W Executive Managing Director - South Asia Sanjay Dutt said: "The deferment in mall space has been largely due to a slowdown in development activities due to a general environment of caution."
Developers want to create the right product which would be beneficial to them as well as occupiers by way of creating maximum sales for the brands located in these malls.C&W projected more than three-fold jump in the total fresh mall supply during 2014 in these eight cities at 14 million sq ft against 4.6 million sq ft in the last year.
"Of the total expected mall supply for the year of 2014 approximately 60 per cent or 8.2 million sq ft of fresh mall supply is expected to be received by National Capital Region (NCR) followed by Bengaluru at 2.86 million sq ft," C&W said.Dutt noted that developers are cautious in entering into new locations and therefore no new project is created or even announced before a thorough study of the location.With retail FDI in place, he said developers are expecting demand from foreign brands to start rising, putting added pressure on them to create conducive shopping environment.
"Even while demand for retail space has been good, there is an obvious concern of creating the right product and having the right tenant mix," Dutt said.
The developers are keen to explore mixed use developments where shopping centre or limited organised retail and or hotel could be one of the other components in addition to housing development, which ensures cash flow, addresses long term value enhancement and better returns.